Last checked at 
(Alliance News) - Rightmove PLC left its revenue and profit guidance unchanged for 2024, though it cut its growth forecast for a key measure, as the property portal noted a "recent change in customer mix".
Rightmove lowered its guidance for the average revenue per advertiser metric, sending its shares on the decline. ARPA for 2024 is expected to grow in the GBP75 to GBP85 range, its guidance lowered from its previous prediction of loftier growth between GBP100-GBP110.
Rightmove shares were down 5.2% to 543.00 pence each in London on Friday afternoon.
"Rightmove is at pains to point out that if it was not for this shift its guidance here would have remained unchanged. However, the fact Rightmove is seeing this shift in itself could be instructive and imply it is finding it harder to secure new customers or upsell existing users in the new-build and traditional estate agent markets," AJ Bell analyst Russ Mould commented.
"This may only add to nervousness about the renewed competitive threat posed by OnTheMarket after the latter’s acquisition by big US outfit Co-Star as a way for it to enter the UK market."
In December, CoStar Group Inc completed the acquisition of OnTheMarket PLC for GBP99 million.
CoStar said the combination would create a "genuine disruptor" to the established UK market leaders.
Andy Florance, founder & chief executive officer of CoStar, fired a warning shot to Rightmove at the time.
"The current market leader [Rightmove] has grown complacent focusing on margin over innovation, and pricing ahead of value," he said.
Rightmove expects 2024 to be a "better year for the UK property market" than last year was.
Rightmove said sales agreed between January and April were 17% higher on-year, with both home buyers and sellers "increasingly looking to transact". However, it cautioned that robust mortgage are still weighing on affordability for the average buyer.
Rightmove said estate agency net memberships have risen by around 250 in the first four months of the year.
The company added: "Our digital end-to-end solution, Lead to Keys, attracted over 70 new partners to Rightmove and over 170 existing partners added the product to their subscription. Independent agent subscriptions to Optimiser Edge now exceed 700, ahead of our expectations when setting the plan for 2024. Our current expectation is that agent branches will increase by up to 2% during 2024 relative to 2023, ahead of our expectations earlier in the year."
Lead to Keys is a platform that allows users to advertise their properties, manage enquiries, go through the referencing process and manage tenancies. The Optimiser Edge package for estate agents allows users to do branded advertising on Rightmove's "most viewed page" in searches.
Rightmove said the rise in memberships is "positive for revenue and profit", though it noted that lettings-only agents usually have a lower average revenue per advertiser.
Its new homes offering has seen 90 new developments added to its Access, entry-level package, tailored for housing associations. Similar to the increase in memberships, this is positive for revenue and profit, but has a lower ARPA.
Rightmove said that its ARPA growth for the first four months of the year would have been in line with guidance, were it not for a "recent change in customer mix".
As a result, ARPA for 2024 is expected to grow in the GBP75 to GBP85 range, its guidance lowered from GBP100-GBP110.
Its outlook for revenue growth is unchanged at the 7% to 9% range. Its underlying operating margin guidance is unchanged at 70%, down from 2023's 73%. Revenue in 2023 amounted to GBP364.3 million.
By Eric Cunha, Alliance News news editor
Comments and questions to newsroom@alliancenews.com
Copyright 2024 Alliance News Ltd. All Rights Reserved.
